The following data were drawn from the records of Finch Corporation. Planned vol
ID: 2558199 • Letter: T
Question
The following data were drawn from the records of Finch Corporation.
Planned volume for year (static budget)
4,700
units
Standard direct materials cost per unit
2.40
pounds
@
$
1.70
per pound
Standard direct labor cost per unit
2.80
hours
@
$
3.40
per hour
Total expected fixed overhead costs
$
23,970
Actual volume for the year (flexible budget)
5,100
units
Actual direct materials cost per unit
2.10
pounds
@
$
2.30
per pound
Actual direct labor cost per unit
3.10
hours
@
$
2.90
per hour
Total actual fixed overhead costs
$
19,770
Required
Prepare a materials variance information table showing the standard price, the actual price, the standard quantity, and the actual quantity.
Calculate the materials price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
Prepare a labor variance information table showing the standard price, the actual price, the standard hours, and the actual hours.
Calculate the labor price and usage variances. Indicate whether the variances are favorable (F) or unfavorable (U).
Calculate the predetermined overhead rate, assuming that Finch uses the number of units as the allocation base.
Calculate the fixed cost spending variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Calculate the fixed cost volume variance. Indicate whether the variance is favorable (F) or unfavorable (U).
Required A
Materials Variance Information Table
Standard price
per pound
Actual price
per pound
Standard quantity for flexible budget
pounds
Actual quantity used
pounds
Required B
Material price variance
U
Material usage variance
F
Required C
Labor Variance Information Table
Standard price
per hour
Actual price
per hour
Standard hours for flexible budget
Actual hours used
Required D
Labor price variance
F
Labor usage variance
U
Required D
e.
Predetermined overhead rate
per unit
f.
Fixed cost spending variance
F
g.
Fixed cost volume variance
F
Planned volume for year (static budget)
4,700
units
Standard direct materials cost per unit
2.40
pounds
@
$
1.70
per pound
Standard direct labor cost per unit
2.80
hours
@
$
3.40
per hour
Total expected fixed overhead costs
$
23,970
Actual volume for the year (flexible budget)
5,100
units
Actual direct materials cost per unit
2.10
pounds
@
$
2.30
per pound
Actual direct labor cost per unit
3.10
hours
@
$
2.90
per hour
Total actual fixed overhead costs
$
19,770
Explanation / Answer
1) STANDARD PRICE PER POUND 1.7 ACTUAL PRICE PER POUND 2.3 STANDARD QUANTITY ON FLEXIBLE BUDGET(5100*2.4) 12240 ACTUAL QUANTITY(5100*2.10) 10710 2) Calculate Material Variance Material price variance(standard price - Actual price)*Actual quantity (1.7-2.3)*12240 -6426 unfavorable Material usage variance=(standard quantity-Actual quantity)*standard price (12240-10710)*1.7 2601 Favorable 3) STANDARD PRICE PER HOUR 3.4 ACTUAL PRICE PER HOUR 2.9 STANDARD HOUR FOR FLEXIBLE BUDGET(5100*2.8) 14280 ACTUAL HOUR (5100*3.1) 15810 4) Labor rate variance ( standard rate - actual rate )*actual hours (3.4-29)*15810 7905 Favorable Labor efficiency variance ( Standard hours- Actual hours)* standard price (14280-15810)*3.4 -5202 unfavorable 5) predetemined overhead rate (23970/4700) 5.1 per unit Fixed cost spending variance Actual -budegeted 19770-23970 -4200 favorable Fixed cost volume variance (5.1*5100)-23970 2040 favorable
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